Regulation special report

Click here to download the PDF

A Never-Ending Story

Complying with new regulations governing how the financial services industry works tends to be pretty costly. I remember moderating the CIOs' panel discussion at our Waters USA event in New York back in December 2010, where I asked the panel members-Peter Kelso, CIO, Deutsche Asset Management; Michael Radziemski, CIO, Lord Abbett and Co.; Scott Marcar, global head of risk and finance technology, RBS; Peter Richards, CTO, JPMorgan; and Drew Vaden, CIO, Nomura Holdings-to estimate how much of the following year's IT budget would be swallowed up by compliance and regulatory spending. The consensus was startling: All the panelists estimated that spending in this area would account for between 30 and 40 percent of their overall 2011 budgets, although they weren't prepared to drill down into the figures to provide a more transparent breakdown of exactly what was being allocated to which area of compliance and regulatory spending.

At the CIOs' panel discussion at the recently held Buy-Side Technology European summit in London, I posed that same question to the four panelists-Chris Sims, CTO, Ignis Asset Management; Simon Lumsdon, CTO, Bluebay Asset Management; Julian Hingorani, CTO, UBS Global Asset Management; and Neil Panchen, CTO, Altana Wealth. I was surprised to hear that their spending forecastswere far more modest-in the region of 10 percent of their total IT budgets. These two examples illustrate the extent to which regulatory and compliance spending differ from firm to firm, even though their regulatory requirements are broadly similar.

Much has been made of the role played by data-the stuff that makes the capital markets world go round-when it comes to regulation and compliance, a phenomenon covered in detail by the Q&A section of this special report that starts on page four. In many respects, a firm's ability to provide evidence of its compliance to regulatory bodies across a range of business activities is largely contingent on the efficacy of its data management processes and governance. In this respect, the greatest challenge facing both buy-side and sell-side firms is not so much generating and storing the requisite data, but rather producing it on demand, in the right format, in a reasonable time period. And that boils down to sound data management, a never-ending story across the capital markets, if ever there was one.

Click here to download the PDF